No 10 defends ministers over tax advice claims

Downing Street today moved to defend ministers under fire for claiming for tax advice on their parliamentary expenses.

HM Revenue and Customs (HMRC) warned last night that expenses claimed for accountancy fees for completing personal tax returns were liable for tax.

It followed the latest disclosure in The Daily Telegraph - which has obtained details of all MPs expenses claims - that 42 ministers had claimed a total of £25,000 for tax advice.

Ten ministers, including Foreign Secretary David Miliband and Home Secretary Jacqui Smith, last night issued a statement insisting that they had paid the tax that was due.

Gordon Brown's spokesman indicated that the Prime Minister was satisfied with their explanation - although he said a reminder was being issued to other members of the Government that they must meet their tax liabilities.

"To the best of our knowledge, ministers do appear to have honoured their tax liabilities and will continue to do so. That was made clear in the statement that was put out last night," the spokesman said.

"Obviously, we are in the process of checking whether ministers who are in this position are paying the tax that is due.

"We will obviously be making it clear to ministers that if there is any tax that has not been paid, it should be paid."

The spokesman said it was a matter for individual MPs and the Commons Fees Office whether ministers claimed Parliamentary expenses for tax advice.

HMRC refused to comment on a BBC report that it had begun an investigation into whether the MPs concerned had broken the law. It stressed however that it was very effective in policing that tax rules.

"We cannot comment on the tax affairs of clearly identifiable groups of taxpayers. One of our key roles is policing the tax rules and we do this very effectively to all of our customers right across the board," a spokesman said.

"It's a general principle of tax law that accountancy fees incurred in connection with the completion of a personal tax return are not deductible. This is because the costs of complying with the law are not an allowable expense against tax.

"This rule applies across the board."

Last night's statement, issued by the Labour Party, covered seven Cabinet members including International Development Secretary Douglas Alexander, Environment Secretary Hilary Benn, Communities Secretary Hazel Blears, Transport Secretary Geoff Hoon and Work and Pensions Secretary James Purnell.

Schools Minister Jim Knight, Local Government Minister John Healey, Foreign Office Minister Gillian Merron and Sheffield Hillsborough MP Angela Smith also signed up to it.

In it they said: "To the best of my knowledge I am satisfied that I have honoured all my tax liabilities and will continue to do so.

"The House of Commons Fees Office provide all Members with a P11D form which states all claims including those that are taxable.

"This includes professional services such as accountants.

"The Member then exhibits this form in their self assessment or passes to their accountant to process on their behalf."

The Daily Telegraph reported that at least seven ministers, including Mr Miliband, employed Dennis Bates, the husband of former foreign office minister Meg Munn, to complete their returns.

Ministers who have made claims using other tax advisers include Olympics minister Tessa Jowell, Universities Secretary John Denham, Europe minister Caroline Flint and Treasury minister Angela Eagle.

Gareth Thomas, the consumer affairs minister, claimed more than £1,000 for accountancy services to help him recover an overpayment of more than £2,000 made to the tax authorities during a previous year, the Daily Telegraph said.

The paper also claims that although ministers have said the advice was necessary for their work as MPs, the receipts make it clear that they were given help with their "personal" tax affairs.

Meanwhile, the "Star Chamber" panel set up by Labour's ruling national executive committee to investigate complaints against MPs was beginning its first hearings into backbenchers Elliot Morley, Ian Gibson, and Margaret Moran.

Party sources indicated that the process would take several days and that no announcements were expected today.

Ms Moran said that she would not be attending due to ill health but she would be sending a representative.

On a campaign visit to North Shields, Mr Brown said that action was being taken to deal with MPs who had misbehaved.

"I assure you, we are taking the action necessary," he said.

"Any MPs who have misbehaved will be dealt with, any MP who has to be disciplined as a result of what they have done will be disciplined, anybody who cannot stand at the next election because of what they have done, we will take the action that is necessary."